95% Failure Rate?
On a recent post, David talked about the 95% failure rate in our business, in particular the nutritional MLMs. He questioned whether this was due to a lack of marketing skills and guidance. It’s an interesting question. But I believe it’s the wrong one…
Because I believe it is based upon a false premise. And when your premise is false, everything that follows will be incorrect as well.
I’ve heard this 95% failure rate bandied around a lot in our business, but I’m just not buying it. I don’t see that in my own group, nor do I see it with the companies and individuals I have coached and consulted with.
Where this comes from is the fact that 95% of the people who join our business don’t become multi-million-dollar producers and earn $75,000 or $100,000 a month.
But I think we’re pretty jaded about that. I can’t tell you how many people earn $7,000 or $10,000 or even $25,000 a month in our business – and think they’re an abject failure!
Take a look around you and the economy in the world today. Do you know what a difference it makes to millions of people if they earn just and extra $300 or $500 a month right now? Do you know how many lives are enhanced, car payments made, or mortgages paid with these bonus checks?
Now I realize that most of the people that join initially say they want to reach the top ranks and make millions of dollars. But realistically, we know a large percentage of them are not really serious about that and doing the work it requires. Many will be happy to simply use the products and get benefits from them. Others will find a new comfort zone and stay there. So that’s not really failure. It’s just the nature of human nature.
-RG
P.S. I’ll be doing another Webinar with Networking Times on Wednesday. The topic is “Growing an MLM Business in Today’s Economy.” I hope you’ll join me. You can register at: https://www2.gotomeeting.com/register/537676563
Spot on Randy. I couldn’t have said it better.
So on target again. Human nature is such that very few see the possibilities in life. Even fewer are courageous enough to seek them out and fewer still have the endurance to follow through.
The masses follow, the few lead. MLMers who go to the top are leaders. We cannot all be leaders but we can all implement changes in our lives. We can use the vehicles offered to grow in health, wealth and personal, just take the first step, see what happens. After all it is the jouney not the destination.
I agree with you Randy, tons of people would be satisfied with just and extra $500 per month coming in. And most that do join the business will never muster up the motivation to go out and earn $7000 – $10,000 per month much less $500. They have to search themselves for their why. They don’t fail, they never start. You can never win (or fail) if you don’t start. I don’t consider it failing, I consider it learning.
Thanks for all the great tips and insights.
Your comment speaks volumes: “they don’t fail, they never start”. Too many of us expect instant success. They must be mentally prepared to “fail”, to fall on their faces, dust themselves off and continue. We ALL fall on our faces, just remember…make sure you fall FORWARD.
The question is whether we see a failure among the companies and/or among the individuals that sell all the products ?
The question is if the extra 500 $ earned has given you a good leverage of your time or not.
Randy, I agree with you, I started in MLM 7 month ago and I havent gone far because is like Ronald said, I never started, I know that this business work because I have a friend that is Diamond in my company and I know how poor she was when she started, I have an aunt too that is sucessful, but my problem is that I never find time ti take care of the business.
Thanks you for the info.
Take care.
Good post Randy. I’ve been in professional business to business sales for over 25 years and network marketing for 5. Overall, the retention rate in sales in general is low because people don’t want to put the time and hard work that they need to in order to succeed. While I agree with you that in today’s economy people would be thrilled to make an extra few hundred per month, I have a suggestion for a topic for you.
How do you deal with the unemployed who had a j-o-b- with health care benefits and got very comfortable with that situation? To approach people in that catagory with a home based opportunity on 100% commission with no or limited health care benefits, can be disasterous.
Sounds like an interesting question. I’ll try to cover that in the webinar Wednesday night.
-RG
That is a shame that people quit trying I don’t make that kind of money yet. But I feel that I can’t quit because I have customers and getting new ones all the time. I consider myself very successful.
I come from a high end corporate position – I think David would find that 95% of those that don’t make it to top of that arena are failures too.
This is my first MLM experience & while I am not yet making $100K a month I know it is possible & I am going in that direction. The only difference between those that succeed (in anything) & those that don’t is whether they are prepared to do the work required to get there.
Randy,
I’m glad I came across your blog. Great post and right on target.
Kay Reeder
Speaking of premises, I think Randy’s premise is off too.
You can’t provide numbers for failure without defining what “failure” is in our business.
If failure is “people who cancel their business” then I would say we have AT LEAST a 95% failure rate. All you have to do is see how many people have quit per 100. If you’re being truthful, it’s extremely high.
What about people who quit in one business, but go to another. Are they failures? If they go to 10 different companies, are those 10 different failures, or one?
If failure is “People who spend more than they make” it’s high too. If they just make $1 over their product cost, then are they successes? Randy makes a good point about that.
But what about the people who buy their products, and have a good experience with that? Are wholesale customers failures?
I keep talking about how our perception of being new-fangled salesmen needs to shift to being new-fangled customers for our industry to really catch fire around the world.
If you’re a “rep salesman” for your company, and trying to find new “rep salesmen”, there are many, many ways to be a failure- and many people are left in the wake.
If you’re a sneezing customer, looking for other sneezing customers, then there really CAN’T be failure, and I think we’ll have many more successes.
I attended my company’s conference and one of the speakers said that according to statistics, X% of distributors drop out. (Not sure about the figure but I think it was 95%?)
What is your opinion on that?
the percentage quoted was made up! it is a common tactic use by speaker to gain credibility, Dan Kennedy teaches his minions to use this tactic, so don’t worry about the number!
speakers focus on “drop-out rate” as a guilt tactic to emphasis their point of, “not quitting this business.” some clever speakers actually convince their audience they never actually really started until the audience employs the speakers one-of-a-kind, never before seen training!
mining the minors is becoming more and more common these days.
Yes it is shocking to me how many speakers will spout completely made up statistics from the platform. I’ve sponsored 162 people into my company, and more than 75 of them are still active. A far cry from 95% dropout rate!
-RG
Randy:
That’s 46%. Out of the 75,you probably have 5 to 10 leaders.
Actually checked more in depth and 92 are still active. And 13 that I would consider pretty strong leaders.
-RG
Randy,
I can’t remember exactly where I read this, I think I may have seen it in Tim Sales’ video, but I think Charles King did some research and more than 90% of the people that stick in one company for 10 years or more earn more than $10,000 per month. While I think that a lot of people quit, and you probably have better retention on your front line than you do in depth (that always happens around a leader), I think the real issue is not that MLM doesn’t work for most people, it’s that most people don’t perform the consistent, daily actions that lead to prosperity over time.
Great job on the post!
David Wood
Thanks to You, I am starting to see the big picture. I need to change my programming and learn new skills in order to do this business. This is a complete different course of action than just telling a new distributor,”just Do it.”
I agree and disagree with Randy – I believe its useless to continue to through good money into a bottomless pitt that has no ROI. All businesses are not profitable for all people so if someone recognizes that they are not meant to be in a specific business – why not quit and move on to something that better suits their skill/knowledge level?
Tim Sales says:
“Most people fail at everything.”
Perhaps the universe is only interested in our intent, the path of our heart.
Perhaps the goal is to discover your true self and not the accumulation of wealth and material luxury, even though they are not mutually exclusive.
There is a battle for your time, energy, focus, attention, intention and dollars. The question is who wins that battle. Maybe a win-win in some cases.
As someone once said:
“You know, in other parts of the universe, they are way ahead of us and have never heard of either money or credit cards.
They’re asking why we have to pay to live on a planet we were born on.”
Thanks for a great post and equally great comments. I’m really having a blast learning this stuff.
In my experience, a 95% drop-out rate is an exaggeration. Besides blanket statistics rarely give you the real picture. To do so you need to dis-aggregate and analyse your data properly. So, into the trash can with that.
Even though I have seen high attrition in my network, I noticed that retention has improved as my attitude to mentoring changed – from being lackadaisical to being like a doting father or pastor. Some will leave no matter what I do but my new motto is: If TOO MANY people stop working their business, look inwards!
Randy,
I agree with you as we’ve talked about the only way to fail is to quit trying to model the most effective actions & behaviors.
So most peole don’t “fail” they just quit trying way to soon… the perseverance thing !
Warren Little
The thing about the failure rate excuse is, that it is usually used by people that just do not know how to say no to the opportunity. Its just like all the other myths such as “pyramid selling” and “the top guy earns all the cash” etc.
Convenient but lacks any logical content. Not suprising since most prospects make decisions on emotion with a little logic thown in for good measure.
Don’t contribute towards it and don’t buy into it!
The success rate is even WORSE than 5%. I would say only .7% make any money at all.
Thank you for this article. I agree with you 100%. In my circle of family and friends, even $5,000 per mo. is a big deal.
Informative article.
Failure in MLM is due to lack of knowledge and innovative ideas.
most important lesson to me is people dont fail they give up trying instead of keep up trying and be a winner @ the end.Thank so much Randy and all have given comment above